Coking Coal Price Negotiation to Start between Japan Steels and BMA

Japanese major integrated steel makers including Nippon Steel and JFE Steel will start price negotiation with BHP Billiton Mitsubishi Alliance (BMA), the world largest coal supplier, next week for heavy coking coal shipped in fiscal 2007 ending March 2008. The price is expected to decrease with easing supply. However, some sources expect the price would decrease only slightly when there are few suppliers to provide high grade heavy coking coal and development and operation costs are increasing at the suppliers. Current price almost doubled from 2 years ago.Japanese major steel makers started opinion exchange with Canadian and Austrian major coal suppliers in November. The makers will have conversation with Rio Tinto and Anglo American of England on world coal supply and demand balance. The negotiation points are being focused through these conferences. The makers could negotiate with BMA even including real price presentation.Coking coal suppliers have expanded heavy coking coal output after the supply much tightened and the price soared up 3 years ago. The supply became even easier in a recent year. China is currently increasing domestic coal production to meet increasing demand at home and the world coal supply condition is not under the influence of China.Japanese major steels’ purchase price for first-grade heavy coking coal decreased by about 8% to FOB 115 dollars per tonne for fiscal 2006 shipping from a year ago. The price decreased for the first time in 3 years, which decreased from fiscal 2005 when the price jumped up to 2.2 times from fiscal 2004. However, the price still stayed at doubled level from fiscal 2004. High-grade heavy coking coal price did not decrease much due to few suppliers in the world, while slightly coking coal price decreased by 30% in fiscal 2006 from a year ago. The price is unlikely to become to the level as low as before fiscal 2004.